The evolution of distributed generation and fewer large-scale remote power projects is upon us, says the nation's largest independent electricity producer.

New York --
NRG Energy Inc. (NRG), the largest independent U.S. electricity producer, bought rooftop solar installer Roof Diagnostics Solar Inc. as it seeks to capitalize on the growing decentralized power market.

Roof Diagnostics will be re-branded as part of NRG's existing solar installation unit, Princeton, New Jersey-based NRG said in a statement today. Terms weren't disclosed. The 475-employee company headquartered in Wall Township, New Jersey will complement and be rolled into NRG's existing rooftop unit NRG Residential Solar Solutions that mainly consists of licensed dealers.

Self-generation using solar panels is becoming competitive with the retail price of power in many states, reaching half of all states by next year, NRG Chief Executive Officer David Crane said yesterday in an interview. He outlined plans to accelerate NRG's shift into a more distributed generation model and the purchase of companies such as Roof Diagnostics.

The shift fits into Crane's vision that the U.S. energy industry is in the midst of a profound transformation. Producing electricity on residential rooftops is upending the century-old model that relied on utilities to deliver power from large generating plants. Instead, NRG is planning for a network that uses many, smaller generating sites located close to where electricity is consumed.

"People thought I was crazy," Crane said, about his prediction last year that these distributed power plants are making the grid increasingly unnecessary. "Now, almost everyone accepts that it is going to happen."

NRG already owns large solar farms that sell energy to utilities, and commercial sites that generate power for businesses. It also delivers electricity to about 3 million customers through its retail businesses. Moving into the residential solar market offers the chance to boost sales to consumers. "The most valuable customers for us are the home energy customers," where margins are higher, Crane said.

Crane detailed his vision of the evolving energy industry in an annual letter to shareholders yesterday. A system that relies on building more large solar projects and wind farms in remote sites would be "an expensive and pointless white elephant," he said.

NRG foresees "a prolonged period through which the traditional centralized grid-based power system co-exists with the fast-emerging high-growth distributed generation sector," Crane wrote. "We are doing everything in our power to head in that direction."

3 Comments

It's a wise business move. Rooftop and parking lot solar is the best place for solar pv. It stabilizes the grid, reduces grid load, and peak load. Don't believe the old utility pr, they stand to lose the peak generation profits first, then the caseload. They will fight this to the death. From his history, this is a business move, not an altruistic one, and that's the best news of all.

We need to nationalize the grid and the peaking generators need to be distributed to the substation level, with island-ing allowed in emergencies. This is a national grid security imperative, there is no need to a single large obsolete baseload nuclear or coal plant failure to bring down the entire grid of several states.

NRG's move into distributed solar is not yet the transformation that Mr. Crane touts in the press release and letter to shareholders, but merely a hedging strategy to position the company in the event of pro-DG policies actually becoming reality. As much as DG advocates (myself included) would like to use this to claim victory, substantial change is needed in the choices that grid operators and distribution companies make in infrastructure investments and management. NRG is certainly no apostle of clean energy, but sees a market opportunity. However, solar DG is still burdened by a utility system that fails to capture its benefits and the mitigating crutch of tax incentives and net metering policies that level the playing are prone to political attacks. Nevertheless, that NRG would make the investment and issue the press release is a positive sign . . .

It's encouraging to see that David Crane has become more circumspect in his corporate policy. Regrettably, acts of needless destruction lay along the path toward this new reasoning. Until 2009, NRG Energy was half-owner of the MIBRAG lignite mining company in eastern Germany. I had been evicted the year before as a resident of the village of Heuersdorf to make way for the expansion of a MIBRAG brown coal surface mine. As is shown on the website www.heuersdorf.de, the villagers hoisted an American flag turned upside down (see: "Der Ort") due to the "dire distress in instances of extreme danger to property". After one of Mr. Crane's visits, MIBRAG insisted that the flag be taken down, a demand that was refused. In 1998, I had developed a proposal called the "Virtual Power Station Heuersdorf" demonstrating how our 700 year old village could have been saved by increased energy efficiency using intelligent power metering. NRG and MIBRAG were not interested in such forward-looking technologies, but only in revenues achieved from CO2-intensive lignite usage. Caution is therefore advised to anyone who wishes to canonize Mr. Crane as an apostle of clean energy. He is a recent convert who might be compared with St. Augustine only if he first illuminates his wayward past in a timely version of the "Confessions".